In a note titled, "Three Stripes, You're Out; Downgrading to EW," Morgan Stanley said that it believes the year-to-date slowdown of Skechers has been due to "longer-lasting issues" and not "temporary macro factors."

With Wednesday's decline, the stock has fallen nearly 30 percent so far in 2016, and nearly 55 percent in the past year.

The firm explained that a shift in consumer preferences is pushing the company to "migrate its product offering faster than expected" which "is causing a delay in orders until SKX adjusts."

Morgan Stanley lowered its full-year earnings forecast to $1.85 per share from $2.25 previously. It said, however, that "equal-weight is the correct rating" with "the stock trading at just 12.5x our new FY17 EPS estimate, we think some of this bad news is priced in."

The firm cut its price target to $25 from $41.

Skechers did not immediately respond to CNBC's request for comment.

Disclosure: Morgan Stanley makes a market in the securities of Skechers.